Saylor Strikes Back: Strategy Slams MSCI’s Flawed Index Test

Strategy Calls MSCI Test a Reworked Crypto Exclusion

Strategy Inc. (Nasdaq: MSTR) urged MSCI connected Aug. 31 to retreat an eligibility trial that could region the institution from its Global Investable Market Indexes. In a formal effect signed by Executive Chairman Michael Saylor and CEO Phong Le, the institution called the methodology “discriminatory, arbitrary, and misguided.”

The institution said funds tracking MSCI GIMI indexes clasp astir 13 cardinal MSTR shares, adjacent to 3.1% of Strategy’s basal shares outstanding and 60% of its 30-day mean regular trading volume. Its public run opposing the proposal says removal would not meaningfully impact the business. Saylor stated connected X:

“MSCI should beryllium a reflector of the market, not an arbiter of it.”

The quality follows an earlier Strategy situation to MSCI aft the scale supplier projected a broader trial for non-operating companies. Strategy argues the caller methodology repackages MSCI’s withdrawn 2025 proposal, which targeted companies whose integer plus holdings represented astatine slightest 50% of full assets.

How MSCI’s Proposed Index Test Works

The scale supplier opened its latest consultation Aug. 3, proposing to grow existing exclusions for concern funds and concern improvement companies. MSCI said companies displaying akin fiscal characteristics could besides go ineligible, adjacent erstwhile their ineligible structures bash not place them arsenic funds.

Under the proposed two-stage screening methodology, companies whose operating assets transcend 50% of full assets would stay eligible. Those failing that trial would look 5 measurements covering operating assets, operating expenses, operating currency flow, just worth changes, and dependence connected outer financing.

Companies triggering astatine slightest 4 fiscal flags could go ineligible. Existing scale constituents would person little restrictive thresholds and indispensable neglect the appraisal during 2 consecutive yearly reviews earlier deletion, portion companies extracurricular the indexes could go ineligible aft 1 review.

MSCI’s simulation utilizing May information identified Strategy, Japan-based Metaplanet, and uranium concern institution Yellow Cake arsenic potential deletions from the MSCI ACWI Investable Market Index. Strategy represented astir $23.93 cardinal of the $27.55 cardinal successful combined float-adjusted marketplace capitalization crossed the six companies facing deletion oregon watchlist placement.

Strategy Defends Bitcoin arsenic an Operating Business

Strategy rejects MSCI’s evident classification of bitcoin arsenic a non-operating asset. A corporate bitcoin treasury typically raises superior oregon uses operating funds to get bitcoin arsenic a reserve asset, though dedicated treasury companies marque that strategy a cardinal portion of their concern models.

The institution said neither U.S. mostly accepted accounting principles nor International Financial Reporting Standards classify assets arsenic operating oregon non-operating successful the mode MSCI proposes. Strategy reports its bitcoin treasury operations arsenic a abstracted operating conception and records bitcoin gains and losses wrong operating expenses, according to the response.

Strategy besides maintains an endeavor analytics bundle concern with astir 1,500 employees and astir $500 cardinal successful yearly revenue. The institution issues bitcoin-backed recognition instruments and different securities intended to make worth from its bitcoin holdings, distinguishing its operation from a passive concern fund.

MSCI retained integer plus treasury companies successful its indexes successful January aft withdrawing its earlier proposal. It said astatine the clip that it would behaviour a broader consultation covering non-operating, investment-oriented companies alternatively than integer plus holders alone.

The existent consultation closes Sept. 30, with MSCI expected to denote its determination by Oct. 16. Potential constituent changes would beryllium announced Nov. 11 and go effectual Dec. 1 if MSCI adopts the methodology.